Cost-of-living reports, such as the Economist Intelligence Unit one that has just ranked Singapore the priciest city in the world, are aimed at comparing costs of living for expatriates and thus do not reflect the cost of living for a local resident, Finance Minister Tharman Shanmugaratnam said in his wrap-up speech on the Budget debate on Wednesday.
There are thus two important differences between what such reports measure and what affects the living costs of Singaporeans, he added.
One is currency. "An important reason why we've become expensive for expatriates is that the Singapore dollar has strengthened," said Mr Tharman.
That makes things pricier for an expatriate who is paid in a foreign currency. But it improves Singaporeans' purchasing power, both at home when buying imported goods, and abroad.
The second important difference is the goods and services whose prices are being measured, which are "quite different from the goods and services consumed by ordinary Singaporeans."
Mr Tharman listed some of the things included in the EIU consumption basket: imported cheese, fillet mignon, "Burberry-type raincoats", the four best seats in a theatre, and three-course dinners in high-end restaurants for four people.
In addition, when it comes to transport, these expatriate cost-of-living surveys only take into account the cost of cars and taxis, not public transport. Cars here are indeed more expensive than in other cities because Singapore is a small country but its public transport and taxi fares are cheaper than in many other hubs, noted Mr Tharman.
"It's not that these surveys are wrong, it's not that they are misguided. They're measuring something quite different from the cost of living for an ordinary local."
Instead, he cited a survey that did try to measure the cost of living for ordinary residents: a 2012 Asia Competitiveness Institute report that had separate measures for the living costs of expatriates' and the typical local household..
For expatriates, Singapore was the 5th most expensive city out of 109. But for residents, it ranked only 61st, comparable to cities such as Hong Kong which ranked 58th, and Seoul which ranked 60th.
Rather than these surveys, "what is important for us is that Singaporeans, and particularly low- and middle-income Singaporeans have incomes that grow faster than the cost of living," said Mr Tharman.
And this is what Singapore has been able to achieve, he added. In the last five years, median household income rose faster than the cost of living, growing 10 per cent after accounting for inflation.
It was similar for low-income households. Excluding imputed rentals - not actual costs, but what home-owners would have to pay if they were tenants of their homes - incomes for the bottom fifth have risen by 19 per cent in the last five years.
"And we keep our eyes focused on that: on how the average Singaporean and the low-income Singaporean is doing in their incomes relative to the cost of living."